Here are five things you need to know this morning
China retaliation: China has launched the latest salvo in the global trade war. Beijing is raising duties on U.S. goods to 84 per cent in retaliation to the most recent tariffs imposed by U.S. President Donald Trump. The latest Chinese countermeasures are effective April 10. China’s move comes hours after Trump’s sweeping measures went into force, taking the cumulative rate announced this year to 104 per cent. China also says it will sue the U.S. at the World Trade Organization and added six firms to its unreliable entity list as well as 12 U.S. firms to its export control list.
Stocks under pressure again: Stock markets are under renewed pressure following China’s tariff move. U.S. equity futures were down about two per cent after a sharp reversal yesterday led to a close well in the red for North American stocks. Stocks in Europe have plunged four per cent, and Asian markets were hit as well. Yesterday, Canada’s main stock index dropped for a fourth straight session, with six stocks dropping for every one that gained as every sector ended lower.
Bond market turmoil: While the damage in the stock market grabs headlines, market insiders are raising alarms over damage in the bond market. U.S. government bonds have been hit with large-scale selling, driving up yields and sparking speculation that investors from other countries (particularly China) are fleeing U.S. assets. Worries are rising that the trade war will be severe enough to trigger a recession and force the U.S. Federal Reserve into cutting interest rates, which further fuelled the selling in U.S. Treasury holdings.
Walmart & Delta pull forecasts: The trade uncertainty has led two major U.S. companies to suspend their financial outlooks. Walmart has pulled its outlook for operating income in the first quarter, citing uncertainty about the potential impact of sweeping tariffs on imports from China, Vietnam and other key sources of goods. Delta Air Lines withdrew its full-year financial guidance, citing uncertainty surrounding global trade. CEO Ed Bastian says the airline is “acting as if we’re going into a recession.”
Seven & i outlook disappoints: The parent company of 7-Eleven has given a forecast for operating profit and revenue for the current year that missed analyst estimates. The guidance miss adds to the pressure on Seven & i Holdings amid a takeover bid by Canadian retailer Alimentation Couche-Tard. So far, Seven & i has rebuffed Couche-Tard’s takeover approaches, opting instead for asset sales and share buybacks.
